From rent, utilities and kitchen equipment to buying quality ingredients and paying your staff, restaurant owners have a long list of costs to manage. If you need extra funding to strengthen or grow your business, you might need restaurant financing. Keep reading to find out about the types of funding available, how to compare restaurant loans and how to find the right loan for your business.<\/p>
There are several different types of restaurant loans available, so consider the following main options when searching for financing.<\/p>
Equipment financing<\/a> provides the money you need to purchase essential business equipment. New and used equipment can sometimes be financed directly with the provider you’re buying it from, but you can also get equipment financing from banks, online lenders and specialist equipment finance companies.<\/p> With this type of loan, you break up the expensive upfront purchase price into manageable monthly payments. The equipment purchased is used as collateral for the loan. This reduces risk for the lender, which makes it possible to get restaurant equipment financing for bad credit.<\/p> Business term loans<\/a> provide a lump sum you can use to pay for large one-time expenses like kitchen and front-of-house equipment. You’ll receive a specific loan amount to be repaid in installments over time. Term loans can go up to $1 million with terms from 3 to 10 years. There are also secured and unsecured loans available.<\/p> A business line of credit<\/a> is a lot like a credit card, but with a lower interest rate. It provides funds you can access when needed up to your pre-determined credit limit, and you only pay interest on the money you actually use.<\/p> Unlike a term loan, which has a fixed repayment period, lines of credit are revolving\u2014once you repay what you borrow, those funds become available to withdraw again whenever you need.<\/p> Many lenders offer business lines of credit ranging from $10,000 to $100,000, but amounts of up to $1 million are available in some cases.<\/p> The Canada Small Business Financing Program<\/a> offers business loans that are up to 85% backed by the Canadian government. Funding is provided to startups and small businesses with annual revenues of less than $10 million, and you can apply for financing through participating banks and credit unions.<\/p> There are two options to choose from:<\/p> There are also limits on the maximum interest rate lenders can charge, so you can find competitive rates with CSBFP loans.<\/p> A merchant cash advance<\/a> provides you with a lump sum in exchange for a percentage of your future debit and credit card sales. How much you can borrow is determined by your previous sales data, and this type of funding provides working capital for your restaurant.<\/p> Merchant cash advances offer fast access to funds, and there’s no collateral required. It’s also possible to qualify for funding if you have less-than-perfect credit. The downside is that high interest rates and fees may apply.<\/p> You can get a restaurant loan by completing the following steps.<\/p> The first step is to clearly define your restaurant’s needs and goals. For example, you may need to upgrade a few old pieces of equipment or purchase new appliances to expand your kitchen’s production capability. Also consider what type of financing you need and what sort of repayment schedule suits your business’ cash flow.<\/p>Business term loans<\/h4>
Business line of credit<\/h4>
Canada Small Business Financing Program (CSBFP) loans<\/h4>
Merchant cash advances<\/h4>
Where can I get restaurant financing?<\/h3>
How to apply for restaurant financing<\/h3>
Step 1: Identify your needs<\/h4>
Step 2: Compare lenders<\/h4>